BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF ALLEGED VIOLATIONS OF THE RULES AND REGULATIONS OF THE COLORADO
OIL AND GAS CONSERVATION COMMISSION BY
AXIA ENERGY LLC, MOFFAT COUNTY, COLORADO
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CAUSE NO. 1V
DOCKET NO. 1307-OV-20
ORDER NO. 1V-419
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ADMINISTRATIVE ORDER BY CONSENT
(Pursuant to Rule 522.b.(3) of the Rules and Regulations of the
Colorado Oil and Gas Conservation
Commission, 2 CCR 404-1)
FINDINGS
History
1.
On August 31, 2012, Axia Energy LLC (“Axia”) spud the Bulldog 5-31H-790
Well (API No. 05-081-07727-01) (“Well”), located in Lot 6, Section 5, Township 7
North, Range 90 West, 6th P.M. Site
specific conditions of approval were imposed on the approval of the Form 2A -
Oil and Gas Location Assessment (Doc. 400255568) and on the approval of Axia’s
Form 15 - Earthen Pit Permit (Doc. 400306819).
2.
COGCC Staff inspected the Well location and the Bulldog 5-31H-790
Completion Pit (Facility No. 429725) (“Pit”) on December 10, 2012 (Doc.
669300286) and December 12, 2012 (Doc. 669300288). The Pit was re-inspected on
January 9, 2013, (Doc. 667100022) after a January 3, 2013, explosion and fire at
the Pit.
NOAV and Alleged Violations
3.
On April 13, 2013, COGCC Staff issued an Amended Notice of Alleged
Violation (“NOAV”) No. 200375865 to Axia Energy LLC for its operations at the
Pit. The following alleged rule violations from the NOAV are pursued in this
Administrative Order by Consent (AOC):
a.
Rule 902.c (Pit Rules) which provides that any accumulation of oil or
condensate in a pit shall be removed within twenty-four (24) hours of discovery.
b.
Rule 902.d (Pit Rules) which requires operators to install appropriate
netting or fencing where it is necessary to protect public health, safety and
welfare or to prevent significant adverse environmental impacts resulting from
access to a pit by wildlife, migratory birds, domestic animals, or members of
the general public.
c.
Rule 903 (Pit Permitting/Reporting) which requires operators to submit an
accurate Earthen Pit Report and comply with conditions of permit approval that
may include additional terms, provisions, or requirements that are necessary to
protect the waters of the state, public health, or the environment;
d.
Rule 906.a (Spills and Releases) which requires that spills/releases of
E&P waste, including produced fluids, shall be controlled and contained
immediately upon discovery to protect the environment, public health, safety,
and welfare, and wildlife resources, and shall be investigated and cleaned up as
soon as practicable;
e.
Rule 907. (Management of Exploration & Production Waste – Operator
Obligations) requires produced water to be treated prior to placement in a
production pit to prevent crude oil and condensate from entering the pit.
Calculation of Base Fine
4.
Rule 523.c specifies a maximum base fine of $1,000 for each day of
violation of all Rules cited in the NOAV. Rule
523.a.(3) provides that the maximum penalty for any single violation shall not
exceed $10,000 regardless of the number of days of such violation, unless the
violation results in significant waste of oil and gas resources, damage to
correlative rights, or a significant adverse impact on public health, safety or
welfare or the environment. Staff does
not allege significant adverse impact in this case.
5.
Alleged violations of Rule 902.c, Rule 902.d, Rule 903, Rule 906, and
Rule 907, are included in the fine calculation as single, 10-day violations. The
fine calculation pursuant to Rule 523 is summarized in the following table:
Rule Number |
Rule Name |
Days of Violation |
Base Fine per day |
Base Fine |
902.c |
Pits- Removal of Accumulated Oil within 24 hours |
10 |
$ 1,000 |
$ 10,000 |
902.d |
Pit -Wildlife Netting |
10 |
$ 1,000 |
$ 10,000 |
903 |
Pit Permitting |
10 |
$ 1,000 |
$ 10,000 |
906 |
Spills and Releases |
10 |
$ 1,000 |
$ 10,000 |
907 |
Management of E&P Waste |
10 |
$ 1,000 |
$ 10,000 |
TOTAL |
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$
50,000
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6.
Pursuant to Rule 523, the base fine for the cited alleged Rule violations
is $ 50,000.
Settlement Terms
7.
Pursuant to Commission Rule 522.b.(3), the Director proposes and Axia
agrees to settle the NOAV with a penalty payment of $50,000 payable within 30
days this Order is mailed by the Commission.
8.
Payment of the fine pursuant to this AOC does not relieve the operator
from its obligations to complete corrective actions set forth in the NOAV, as
may be amended or modified by COGCC Staff.
9.
Axia, or its successors or assigns, shall remain responsible for
complying with this AOC, in the event of any subsequent sale of the Well.
10.
Axia
agrees to the findings of this AOC only for
the purpose of expeditiously resolving the matter without a contested hearing. Pursuant to Rule 522.c.(3),
entering into this AOC by Axia shall not be construed as an admission of the
alleged violations. Axia fully reserves its
right to contest the same in any future action or proceeding other than a
proceeding to enforce this AOC.
ORDER
NOW, THEREFORE, THE COMMISSION ORDERS that:
1.
Axia Energy LLC agrees to pay a penalty for the alleged violations of
Rules 902.c, 902.d, 903., 906., and 907. for its operations at the Bulldog 5-31H
Completion Pit and Well.
2.
Axia is assessed a total penalty of $
50,000 for the Rule violations described above.
3.
Payment of the $50,000 penalty is due not more than 30 days after this
Order is mailed by the Commission.
4.
Payment of the fine pursuant to this AOC shall not relieve Axia from its
obligations to complete remaining corrective actions set forth in the NOAV, as
may be amended or modified by COGCC Staff.
5.
Entry of this Order constitutes final agency action for purposes of
judicial review 30 days after the date this order is mailed by the Commission.
6.
This Order is effective immediately.
7. The Commission expressly
reserves its right after notice and hearing, to alter, amend, or repeal any
and/or all of the above orders.
RECOMMENDED this 15th __
day of August, 2013.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By________________________________________
Peter J. Gowen, COGCC
Enforcement Officer
AGREED TO AND ACCEPTED this _____ day of August,
2013.
AXIA ENERGY LLC
By:
_____________________________________
Signature of Authorized Axia Representative
_____________________________________
Print Signatory Name
_____________________________________
Title of Signatory
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This Administrative Order by Consent was heard by the Commission on the 16th
day of, September 2013, and approved.
ENTERED this ______ day of
, 2013, as of the 16th day of September, 2013.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By______________________________________
Robert J. Frick, Secretary